Q4 2023 Celsius Holdings Inc Earnings Call

[music].

Greetings and welcome to Celsius as full year 2023 earnings conference call.

Unknown Executive: Time. For more information, visit www.fema.gov. Thank you, and good morning everyone. We appreciate you joining us today for Celsius Holdings' fourth quarter 2023 earnings conference call. Joining me on the call today are Jon Fieldly, chairman and chief executive officer, and Jarrod Langhans, chief financial officer. The call will open to questions following the prepared remarks.

At this time all participants are in a listen only mode. A question and answer session will follow the formal presentation.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded.

It is now my pleasure to introduce Paul Wiseman Investor Relations for Celsius.

You may begin.

And good morning, everyone. We appreciate you joining us today for Celsius Holdings fourth quarter 2023 earnings Conference call. Joining me on the call today are John Field, Li Chairman and Chief Executive Officer, and Jarrod Langhans, Chief Financial Officer.

Al will open to questions following the prepared remarks.

Unknown Executive: The company released its fourth-quarter earnings press release earlier this morning, and all materials are available on the company's website, celsiusholdingsinc.com, as well as on the SEC's website, sec.gov. As a reminder, an audio replay of this call will be available later today and can be accessed with the same live webcast link in our conference call announcement release. Please be aware that this call may contain forward-looking statements that are based on forecasts, expectations, and other information available to management at this time. These statements involve numerous risks and uncertainties, including many that are beyond the company's control.

The company released its fourth quarter earnings press release earlier. This morning, and all materials are available on the company's website Celsius Holdings, Inc. Dot com as well as on the Sec's website SEC Dot Gov.

As a reminder, an audio replay of this call will be available later today and can be accessed with the same live webcast link in our conference call announcement release.

Please be aware that this call may contain forward looking statements, which are based on forecasts expectations and other information available to management at this time.

These statements involve numerous risks and uncertainties, including many that are beyond the company's control.

Unknown Executive: Except to the extent as required by law, Celsius Holdings undertakes no obligation and disclaims any duty to update any of these forward-looking statements. We encourage you to review in full our Safe Harbor Statements contained in today's press release and in our quarterly filings with the SEC for additional information. Additionally, management will share operating results on both a GAAP and non-GAAP basis.

Except to the extent as required by law Celsius Holdings undertakes no obligations and disclaims any duty to update any of these forward looking statements we.

We encourage you to review in full our Safe Harbor statements contained in today's press release and in our quarterly filings with the S. E C for additional information.

Additionally, management will share operating results on both a GAAP and non-GAAP basis descriptions of the non-GAAP financial measures that we use such as non-GAAP adjusted EBITDA and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release for the fourth quarter of 2012.

John Fieldly: Descriptions of the non-GAAP financial measures that we use, such as non-GAAP adjusted EBITDA, and reconciliations of these measures to our results, as reported in accordance with GAAP, are detailed in our earnings release for the fourth quarter of 2023. With that, I'd like to turn the call over to Chairman and Chief Executive Officer Jon Fieldly for his prepared remarks. Thank you and welcome everyone to today's call. Also, welcome to Paul Wiseman, who recently joined Celsius as our Senior Vice President of Communications. Celsius had a stellar 2023 fourth quarter, the best earnings year in our company's history. We have achieved nearly complete distribution coverage in the United States, topping 98% ACV, which is a major achievement, putting our products within reach of more consumers and more consumption occasions with greater flavors and size options than ever before.

Three.

With that I'd like to turn the call over to Chairman and Chief Executive Officer, John Field Lee for his prepared remarks.

And welcome everyone. Today's call also welcomed Paul Wise men, who recently joined Celsius, as our senior Vice President of Communications.

Celsius had a stellar 2023 fourth quarter the best earnings year in our company's history, we've achieved nearly complete distribution coverage in the United States topping 98% E. C V, which is a major achievement, putting our products and reach of more consumers and more consumption occasions with greater.

Flavors in size options than ever before.

John Fieldly: In 2023, Celsius set a new yearly revenue record, growing more than 102% or $664 million in sales to finish the year at just over $1.3 billion. Celsius is now truly a billion-dollar brand. Our impressive share gains in 2023 have resulted in Celsius becoming the first company to break the 10-share barrier in more than a decade. According to Circana, IRI's recent four-week read ending February 11, 2024, in Total Energy U.S., Celsius held a new record of 11.5 shares nationwide in MULOCK.

In 2023 Celsius set a new yearly revenue record growing more than 102% or $664 million in sales to finish the year at just over $1.3 billion.

Celsius is now truly a billion dollar brand.

Our impressive share gains in 2023 have resulted in Celsius, becoming the first company to break the 10 share barrier a more than a decade according to IRI.

I rise recent four week read ending February 11, 2024, and total energy U S. Celsius held a new record at 11.5 share nationwide and Mulan.

John Fieldly: The energy drink category is now a three-team race. As of January 2024, Celsius had exceeded a 15% share in over a dozen U.S. markets, and in a few of those, we are within just a few points of our next closest competitor or have already taken them. Our strong innovation pipeline continues to delight consumers whose taste for zero-sugar energy drinks has nearly tripled the overall category sales to a zero-sugar majority. This year, we have launched two new core SKUs, Sparkling Raspberry Peach and Fizz-Free Blue Raspberry Lemonade. In addition, two new Celsius Vibe flavors, AstroVibe and Galaxy Vibe, which have taken our Space Odyssey trilogy even further with the launch of our Cosmic Vibe in 2023 in Circle K. Celsius also launched its Essentials product line, which has proven essential performance energy with essential aminos.

The energy drink category is now a three team race.

As of January 2020 for Celsius had exceeded a 15 share in over a dozen U S markets and a few of those we are within just a few points of our next closest competitor or have already taken them.

Our strong innovation pipeline continues to delight consumers, whose tastes for zero sugar energy drinks has nearly tripled the overall category sales to a zero sugar majority. Although this year, we have launched two new core skus sparkling raspberry Peach and fees free Blue Raspberry Lemonade in addition to new <unk>.

She is by flavors Astrovirus <unk> galaxy by which has taken our space Odyssey truly G. Even further with the launch of our cosmic Vibe and 2023 and circle K Celsius also launched Celsius Essentials product line, which has proven a central performance energy with a central our meters.

John Fieldly: We are executing our plans to grow the business internationally, taking a methodical approach in each new market we enter. We're very pleased with our sales in Canada after two months. In the country, consumer enthusiasm and acceptance have exceeded our expectations. We're pursuing disciplined growth in our best-in-class sales and marketing organizations. And just two weeks ago, Celsius was recognized with the 7-Eleven's prestigious 2023 Supplier of the Year Award in the non-alcoholic category. This is a tremendous achievement, and I want to thank all of our dedicated team members for achieving this great top industry award. Best-in-class teams drive best-in-class results.

We are executing our plans to grow the business internationally, taking a methodical approach in each new market. We enter we're very pleased with our sales in Canada. After two months in the country consumer enthusiasm and acceptance has exceeded our expectations.

We're pursuing disciplined growth and our best in class sales and marketing organizations and just two weeks ago Celsius was recognized with the seven elevens prestigious 2023 supplier of the year Award and the non alcoholic category. This is a tremendous achievement and I want to thank all of our dedicated team members on achieving this great.

Top industry Award best in class teams drive best in class results.

John Fieldly: With nearly full distribution, we are focusing on driving growth through three areas, increasing total distribution points at each location, growing in Non-Track Channels, and International Expansion Over the Long-Term Horizons. Celsius was again the top driver of the energy category in dollars and units sold in MULOCK, ending the fourth quarter up 126.6% and up 140.2% for the full year of 2023, supporting a 30.6% share of all the energy category growth for the year. Already this year, we've launched several new and exciting innovations, as well as a brand update to our line of fizz-free beverages, which have a strong and loyal consumer base A new fizz-free multi-pack, available now in Target stores, brings together a refreshing selection for our consumers who prefer non-carbonated energy drinks.

With nearly full distribution, we're focusing on driving growth through three areas.

Increasing total distribution points at each location.

Growing in non tracked channels and international expansion over the long term horizon.

Celsius was again the top driver of the energy category in dollars and units sold in Milwaukee, ending in the fourth quarter up 126.6% and up 141, 2% for the full year of 2023 supporting a 36% of all the energy category growth for the year.

Already this year, we've launched several new and exciting innovations as well as a brand update to our lineup phys free beverages, which have a strong and loyal consumer base and you've phase free multi pack available now in target stores brings together refreshing selection to our consumers who prefer the non carbonated energy drinks.

John Fieldly: Sales of Celsius Essentials, our new line of performance-oriented energy 16-ounce beverage products launched in the fourth quarter at 7-Eleven stores across the United States. And our two new flavors, Sparkling Mango Tango and Sparkling Fruit Burst, bring the Celsius Essentials line to six unique SKUs. As of January 2024, Celsius Essentials has achieved a record 40% ACV. Year-to-date, February 18th, it's at 49% ACV. Continuing to see great acceptance across retailers across the country. Also, in January, our Celsius On-The-Grow Powders claimed the number one position in the energy powder category according to Cercanas IRI, commanding a 23.1 share, having increased 5.6% compared to the prior period. We have several new On the Grow powder innovations planned for this year and see great opportunities with our versatile On the Grow product line. Starting in 2024, spring resets will begin in January and typically run through May.

Sales of Celsius Essentials, our new line of performance orientated energy, a 16 ounce beverage products launched in the fourth quarter at 711 stores across the United States and our two new flavors sparkling mango tango and sparkling fruit burst bring the Celsius, a central line to six unique skus as of January.

2020 for Celsius Essentials has achieved a record 40% of your C V year to date February 18th it's at 49% ACB continuing to see great acceptance across retailers across the country.

So in January our Celsius on the grow powders claimed the number one position in the energy powdered category. According to you Sir Connors IRI commanding a 23.1 share having increased five 6% compared to the prior period.

We have several new on the grow powder innovations planned for this year and see great opportunities with our versatile on the grow product line.

In 2020 for spring resets began in January and typically run through May we are very pleased with the incremental space were getting which will be reflected across the first and second quarters of 2024.

John Fieldly: We are very pleased with the incremental space we're gaining, which will be reflected across the first and second quarters of 2024. As a reminder, planograms used for most of 2023, when our dollar sales grew 140%, were created while we were holding and held approximately a 4.5 share in the category. For 2024, shelf-based planning was conducted with retail partners in Q3 of 2023 when we held a double-digit share position. Celsius is also now fully integrated into PepsiCo's annual planning cycle, and we anticipate ongoing close collaboration with our primary North American distribution partner and expanded Key Accounts team.

As a reminder plan O grams used for most of 2023 when our dollar sales grew 140% were created while we're holding and held a full approximately a 4.5 share in the category.

For 2020 for shelf space planning was conducted with retail partners in Q3 of 2023, when we held a digital double digit share position. Celsius is also now fully integrated into pepsico's annual planning cycle, and we anticipate ongoing close collaboration with our primary North American distribution partner in <unk>.

<unk> key accounts team.

John Fieldly: Our pursuit of our perfect store resulted in a 60% increase in display activity across the United States, and we placed more than 10,000 Celsius branded coolers in 2023, an increase of over 300% year-over-year. We intend to continue growing our base of brand new coolers throughout this year. Non-track channels continue to be a tailwind for us as well. Club sales for the fourth quarter were $77.1 million, up 64% year-over-year.

Our pursuit of a perfect storm resulted in a 60% increase in display activity across the United States and we placed more than over 10000 Celsius branded coolers in 2023.

And an increase of over 300% year over year, we intend to continue growing our base of branded coolers throughout this year.

Non tracked channels continued to be a tailwind for us as well club sales for the fourth quarter were $77 1 million up 64% year over year club sales for the full year 2023 were $254 6 million, representing an $83 six increase year over year.

John Fieldly: Club sales for the full year 2023 were $254.6 million, representing an $83.6 increase year-over-year. We achieved the number one energy drink position on Amazon in 2023, finishing the full-year revenue at $101 million, a 72.9% increase year-over-year. Our refreshing, great-tasting products are ideal for the meal occasion, and today, more than 12.5% of our PepsiCo sales are to the food service channel. For example, in 2023, we gained distribution in over 2,000 Jersey Mike stores and are authorized to sell in more than 3,000 Dunkin' Donut locations nationwide.

We achieved the number one energy drink position on Amazon in 2023, finishing the full year revenue at $101 million, a 72, 9% increase year over year.

A refreshing great tasting products are ideal for the meal occasion, and today more than 12.5% of our Pepsico sales is to the foodservice channel. For example in 2023, we gained distribution in over 2000 Jersey, Mike stores and are authorized to sell in more than 3000, Dunkin' donuts locations nationwide we.

John Fieldly: We believe there are incremental growth opportunities for Celsius and non-tracked outlets, such as vending, hospitals, corporate cafeterias, college campuses, and more. Turning to international, we began distribution and sales in Canada through Pepsi in mid-January. As we had previously signaled, after approximately one month of sales, we are very pleased with the results and even more so to delight our Canadian consumers who have embraced our products. International sales reached $14.6 million in the fourth quarter of 2023 and $54.7 million for the full year. Also, in January, we announced a sales and distribution agreement with Suntory Beverage for Great Britain and Ireland. We expect sales in the United Kingdom to begin gradually, starting in the Finnish Channel in the second quarter.

Believe there's incremental growth opportunities for Celsius in non tracked outlets such as vending hospitals, corporate cafeterias and college campuses and more <unk>.

Turning to international we began distribution and sales in Canada through the Pepsi in mid January.

As we had previously signaled after approximately one month of sales. We are very pleased with the results and even more so to delight, our Canadian consumers, who have embraced our products.

International sales reached $14.6 million in the fourth quarter of 2023, and $54 7 million for the full year.

Also in January we announced the sales and distribution agreement with Suntory beverage for Great Britain, and Ireland, we expect sales in the United Kingdom to begin gradually starting in the finished channel in the second quarter.

John Fieldly: We expect additional international expansion this year, and as previously stated, we're taking a methodical approach to our international growth. And we will be following our international growth playbook in each new market we enter. Before I hand it over to Jarrod to discuss financial highlights for the quarter and the full year, we have several exciting marketing developments and achievements to be proud of. Celsius recently announced a renewed multi-year global team sponsorship with Formula One's iconic Ferrari racing team.

We expect additional international expansion this year and as previously stated we're taking a methodical approach to our international growth and we will be following our international growth playbook in each new market we enter.

Before I hand, it over to Gerry to discuss financial highlights for the quarter and the full year, we have several exciting marketing developments and achievements to be proud of Celsius recently announced a renewed multi year global team sponsorship with formula one's iconic Ferrari racing team Major League soccer kicked off its regular season.

Jarrod Langhans: Major League Soccer kicked off its regular season last week, and Celsius is a proud league partner as well as a key sponsor of multiple teams and players across the United States and Canada. These strategic investments place our premium brand in the forefront of consumers who share our passion to live fit. With that, I'll pass it over to our Chief Financial Officer, Jarrod Langhans, to discuss our fourth quarter and 2023 full-year financial results. Jarrod?

Last week and Celsius is a proud league partner as well as key sponsor of multiple teams and players across the United States and Canada. These strategic investments place our premium brand in the forefront of consumers who share our passion to live fit with that I'll pass it over to our Chief Financial Officer, Jerry Langan to discuss.

Our fourth quarter and 2023 full year financial results Jared. Thanks, John There was another great quarter in which we continued to exceed both internal and external expectations not only are we continuing to benefit from Pepsi distribution system, but we were also delivering an increase SKU count improved placement increased displays and continuous improvement.

Jarrod Langhans: Thanks, Jon. It was another great quarter in which we continued to exceed both internal and external expectations. Not only are we continuing to benefit from Pepsi's distribution system, but we are also delivering on increased queue count, improved placement, and improved sales. [Inaudible] Turning to our fourth quarter financial highlights, revenue for the three months ended December 31st, 2023 was approximately $347 million, an increase of 95% from $178 million for the three months ended December 31st, 2022, driven by our North American business, where fourth As it relates to days on hand with our primary distributor, our inventory turns relative to depletions were consistent with our Q3 2023 turnover.

In velocities as we look to Q1 and beyond we will continue to invest in our growth.

Turning to our fourth quarter financial highlights revenue for the three months ended December 31, 2023 was approximately $347 million an increase of 95% from $178 million for the three months ended December 31st 2022, driven by our North American business, where fourth quarter revenues were 333.

An increase of 97% from the same period in 2022.

International revenue grew 68% to $15 million as velocity continued to increase as it relates to the days on hand, with our primary distributor our inventory turns relative to Depletions was consistent with our Q3 'twenty twenty-three turnover.

Jarrod Langhans: We attribute our sales volume growth for the quarter compared to 2022 to several key drivers, including successful integration into the Pepsi distribution system, which has resulted in broader availability, increased SKU mix, and improved placement. We're also benefiting from robust expansion in our traditional distribution channels and club channels, with SKU increases and placement improvements contributing significantly. Moreover, our products are now found in several new channels within CNG and Food Service. Gross profit for the three months ended December 31st, 2023, increased 110% to $166 million, up from $79 million in the year-ago quarter. Gross profit margins in the fourth quarter were approximately 48% of revenues compared to approximately 44% for the prior year's fourth quarter.

We attribute our sales volume growth for the quarter compared to 2022 to several key drivers, including successful integration into the Pepsi distribution system, which has resulted in broader availability increased SKU mix and improved placement. We're also benefiting from robust expansion in our traditional distribution channels and club channels with SKU increases in placement in.

<unk> contributing significantly.

Moreover, our products are now found in several new channels within CMG and foodservice.

Gross profit for the three months ended December 31, 2023 increased 110% to $166 million up from $79 million in the year ago quarter gross profit margins in the fourth quarter were approximately 48% of revenues compared to approximately 44% for the prior year fourth quarter the.

Jarrod Langhans: The improvement in gross profit margins is attributed to efficiencies in raw material sourcing, product waste reduction, and benefits from improved leverage across promotional allowances. Q4 was the fifth consecutive quarter that we were operating within the Pepsi distribution system, and we expect to continue driving efficiencies while maintaining our number one goal of keeping the shelves stocked to meet strong consumer demand. Sales and marketing expenses for the quarter were approximately $80 million, a decrease of approximately 11% compared to the fourth quarter of 2022.

Improvement in gross profit margins is attributed to efficiencies and raw material sourcing product waste reduction in benefits from improved leverage across promotional allowances.

Q4 was the fifth consecutive quarter that we were operating within the Pepsi distribution system, and we expect to continue driving efficiencies, while maintaining our number one goal of keeping the shelf stock to meet strong consumer demand.

Sales and marketing expenses for the quarter were approximately $80 million a decrease of approximately 11% compared to the fourth quarter of 2022. The decrease was due to prior year costs associated with the termination of legacy distributors as part of the transition to the Pepsi network.

Jarrod Langhans: The decrease was due to prior year costs associated with the termination of legacy distributors as part of the transition to the Pepsi network. We continue to invest behind our growth in Q4, incurring sales and marketing costs in line with historical rates. As a percentage of sales, sales and marketing was 23% compared to 29% in the prior year, adjusted for distributor termination expenses in 2022. We plan to continue investing in our sales and marketing and plan a similar spend as a percentage of sales in the first quarter of 2024. General and administrative expenses for the three months ended December 31, 2023 were approximately $27 million, an increase of 24% relative to Q4 2022.

We continued to invest behind our growth in Q4, incurring sales and marketing costs in line with historical rates as a percentage of sales sales and marketing was 23% compared to 29% in the prior year adjusted for distributor termination expenses in 2022.

We plan to continue investment in our sales and marketing and plan a similar spend as a percentage of sales in the first quarter of 2024.

General and administrative expenses for the three months ended December 31, 2023 were approximately $27 million, an increase of 24% relative to Q4 2022 as a percentage of sales G&A was 8% compared to 12% in the prior year as we continue to leverage our G&A against our significant growth.

Jarrod Langhans: As a percentage of sales, G&A was 8% compared to 12% in the prior year, as we continue to leverage our G&A against our significant growth. And looking back at prior periods, even with our historical growth rates, we do tend to see some seasonality within the fourth quarter relative to the third quarter. We saw similar activities in the fourth quarter, whereby we were not able to capitalize on the great work from our sales and marketing teams as it relates to displays on hand and other promotional activities that we are able to take advantage of during the summer selling season.

And looking back at prior periods, even with their historical growth rates, we do tend to see some seasonality within the fourth quarter relative to the third quarter. We saw similar activities in the fourth quarter, whereby we are not able to capitalize on the great work from our sales and marketing teams as it relates to displays on hand, and other promotional activities that we were able to take advantage of dirt.

The summer selling season, even with this we ended the year strong and have since well exceeded the 10 share marker as noted by John earlier in the call.

Jarrod Langhans: Even with this, we ended the year strong and have since well exceeded the 10 share marker, as noted by Jon earlier in the call. Looking at the full year 2023, as you will see in the 10k issued this morning, we made great progress in our remediation efforts around our internal control environment. We were successful in remediating the prior period controls associated with IT general controls, as well as creating and delivering a much more robust COSO environment.

Looking at the full year 2023, as you will see in the 10-K issued this morning, we made great progress in our remediation efforts around our internal control environment. We were successful in are mediating the prior period controls associated with it general controls as well as creating and delivering a much more robust coastal environment.

Jarrod Langhans: Although we made huge strides in 2023, there are still a handful of areas where components of larger areas of the control environment need some additional time to fully remediate. With that said, I'd like to thank the entire Celsius team for the great effort, and in particular our finance and IT teams, for their focus and dedication to this matter in 2023. I look forward to our continued progress in 2024. Now, to the results.

Although we made huge strides in 2023, there is still a handful of areas where components of larger areas of the control environment need some additional time to fully remediate with that said I'd like to thank the entire Celsius team for the great effort and in particular, our finance 90 teams for their focus and dedication to this matter in 2023 I look forward to our continued pre.

Regress in 2024.

Now to the results revenue for the 12 months ended December 31, 2023 was approximately $1.3 billion, an increase of 102% from $654 million for the 12 months ended December 31, 2022, driven by our North American business North America full year 2023 revenues were one point you said.

Jarrod Langhans: Revenue for the 12 months ended December 31, 2023 was approximately $1.3 billion, an increase of 102% from $654 million for the 12 months ended December 31, 2022, driven by our North American business. North American full year 2023 revenues were $1.27 billion, an increase of 105% from the same period in 2022. International revenue grew 52% to $55 million in 2023 relative to full year 2022. Gross profit for the 12 months ended December 31st, 2023 increased 134% to $633 million, up from $271 million in the prior year period. Gross profit margins for the full year of 2023 were approximately 48% of revenues, compared to approximately 41% for the prior year period. The improvement in gross profit margins is attributed to lower package and raw material costs.

$1 billion, an increase of 105% from the same period in 2022 International revenue grew 52% to $55 million in 2023 relative to full year 2022.

Gross profit for the 12 months ended December 31, 2023 increased 134% to $633 million up from $271 million in the prior year period.

Gross profit margins in the full year of 2023 were approximately 48% of revenues compared to approximately 41% for the prior year period.

The improvement in gross profit margins is attributed to lower package and raw material costs as things stand today, we would expect 2024 gross profit margins to be fairly consistent with the Q4 and full year margin profile as we are confident in maintaining the great progress that was made in 2023.

Jarrod Langhans: As things stand today, we would expect 2024 gross profit margins to be fairly consistent with the Q4 and full year margin profile, as we are confident in maintaining the great progress that was made in 2023. We're always shooting for the moon, but with the uncertainty around the macro environment from both an operational and promotional perspective, we believe that it is prudent to give ourselves some additional time into 2024. As a percentage of sales, sales and marketing was 20% in the 12 months of 2023, compared to 24% in the prior year's same period, adjusted for distributor termination expenses.

We're always shooting for the moon, but with the uncertainty around the macro environment from both an operational and promotional perspective, we believe that it is prudent to give ourselves some additional time into 2024.

As a percentage of sales sales and marketing was 20% in the 12 months of 2023 compared to 24% in the prior year same period adjusted for distributor termination expenses. This demonstrated the leverage that we can obtain within our sales and marketing costs. We made great progress in 2023, but we are now moving to the next level and the next target beyond.

10% market share and to do that we will need to continue to invest in our growth and our brand as seen with the multiple Super Bowl Activations that we did in February a recently announced multiyear partnership with Ferrari within Formula one as well as our multiyear MLS partnership.

Jarrod Langhans: This demonstrated the leverage that we can obtain within our sales and marketing costs. We made great progress in 2023, but we are now moving to the next level and the next target, beyond 10% market share. And to do that, we will need to continue to invest in our growth and our brand, as seen with the multiple Super Bowl activations that we did in February, our recently announced multi-year partnership with Ferrari within Formula One, as well as our multi-year MLS partnership. G&A expense as a percentage of sales was 8% for the 12 months of 2023 versus 12% in the prior year same period.

G&A expense as a percentage of sales was 8% for the 12 months of 2023 versus 12% in the prior year same period, we will continue to invest in our back shop and build out a team that is value added to our operations sales and marketing programs there will be opportunity to further leverage G&A in 'twenty 'twenty, four and beyond but it will be at a thoughtful and methodical pace.

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Focusing now on liquidity and capital resources as of December 31, 2023, we had cash in excess of $755 million and net working capital in excess of $928 million.

Cash flows provided by operating activities totaled in excess of $140 million for the 12 months ended December 31, 2023, which compares to $108 million and net cash provided by operating activities for the 12 months ended December 31 2022.

Jarrod Langhans: We will continue to invest in our back office and build out a team that adds value to our operations, sales, and marketing programs. There will be opportunity to further leverage G&A in 2024 and beyond, but it will be at a thoughtful and methodical pace. I am now focusing on liquidity and capital resources. As of December 31, 2023, we had cash in excess of $755 million and networking capital in excess of $928 million. Cash flows provided by operating activities totaled in excess of $140 million for the 12 months ended December 31, 2023, which compares to $108 million in net cash provided by operating activities for the 12 months ended December 31, 2022.

We will continue to invest in our business.

Thank you ladies and gentlemen at this time, we will be conducting a question and answer session.

If you'd like to ask a question you May press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue.

You May press Star two if you would like to remove your question from the Q4.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key.

Our first question comes from the line of Mark Astrachan with Stifel. Please proceed with your question.

Yeah, Hey, good morning, guys.

Two questions for me.

Unknown Executive: We will continue to invest in our business. Thank you. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you would like to ask a question, please Star 1. Unknown Speaker, Unknown Speaker, Star 2, will be necessary to pick up. Our first question comes from the line of Mark Astrachan, with your questions. Yeah, hey, morning, guys.

One just on gross margin.

Maybe talk a little bit about why it would step back in <unk> relative to <unk>, even after adjusting for the promotional allowance accrual last quarter, meaning I would've expected to be a little bit better or was there some sort of one offs in that number and how do we think about progression of that into 'twenty four.

Mark Stiefel Astrachan: Two questions. For me, one, to thank Gross Margin. Maybe talk a little bit about why it stepped back in 4Q relative to 3Q, even after adjusting for the promotional allowance accrual last quarter, meaning I would have expected it to be a little bit better. Was there some sort of one-off in that number? And how do we think about the progression of that into 24? Unknown Speaker.

And then the second question I appreciate the commentary on inventories from a channel standpoint, with your largest customer.

But if I take a look at what the sales look like in the scanner data tracked channels. In addition to what you disclosed in the regulatory filings on Amazon and Costco sales I still get a fairly big disconnect between what it looks like you should have sold in the quarter and what you actually did meaning that you under shipped some.

Unknown Executive: The second question... I appreciate the commentary on inventories from a channel standpoint with your largest customer, but if I take a look at what the sales look like in the scanner data track channels, in addition to what you, Unknown Attendee, Yeah, thank you, Mark. I'll join in on the first part of the question. We'll throw it over to Jarrod as well.

We're in the channel. So maybe you could help with that too. Thank you.

Yes. Thank you Mark I'll join in on the first parts of the question I'll throw it over to Jared as well I think when you look at the overall margins.

John Fieldly: I think when you look at the overall margins, you know, I think we're really pleased with the margins, especially for the full year, up over 660 basis points, just a phenomenal job on behalf of the team and supply chain. We're maintaining a pricing promotional architecture within the category. When you look at the fourth quarter, we did launch a new line, our Celsius Essentials line, which is a 16-ounce line, and we had a variety of innovative launches that were executed during the quarter. So I think we're pretty pleased with where the margins came in, and there are opportunities to improve going forward. But at this point in time, I think that's a... team did a really good job for the year.

We're really pleased with the with the margins, especially for the full year up over 660 basis points, just a phenomenal job on behalf of the team and supply chain and our key accounts team.

We're maintaining our pricing and promotional architecture within the category.

When you look at the really the fourth quarter, we did launch a new line or Celsius Essentials line, which are 16 ounce line and we had a variety of innovation launches.

That were executed during the quarter so.

I think we're pretty pleased with where the margins came in and.

There's opportunities to improve going forward, but.

At this point in time I think that's a fair team did a really good job for the year.

John Fieldly: And in regards to inventory by channel, you know, we did have some seasonal impact in Q4 that we experienced. We did have good results on Amazon and within the club channel, but we did see especially impacted, mainly in food and really large format. A lot of our volume, you know, we've done a great job and on half of our distribution partner as well, really keeping the amount of cases on display up. You know, we're still gaining, and hope to gain additional placements and additional expansion in the upcoming sets that are being reset. But we do rely heavily, especially in large format, on display activity. And when you look at the fourth quarter, we do see a lot of display activity coming from seasonal items that are outside of, you know, the summer or the rest of the year. So those are some headwinds we experienced in the fourth quarter, but I'll throw it over to Jarrod for any additional highlights. Now, you're right, Jon.

In regards to inventory by channel, we did have some seasonal impact in Q4 that we did experience. We did have good results on Amazon and within the club channel, but we did see especially impacted mainly in food and and really large format. A lot of our volume we have done a great job.

On half of our distribution partners, well really keeping the amount of cases on display.

We're still gaining well hope to gain additional placements.

Placements and additional expanded spansion and the upcoming sets that are being reset, but we do rely heavily especially in large format on display activity and when you look at the fourth quarter, we do see a lot of display activity coming for them seasonal items that were competing with outside of.

You know the summer or the rest of the year. So there's some headwinds we experienced in the fourth quarter, but I'll throw it over to Jared for any additional highlights.

Now you're right John it's when we're looking at kind of just more of a days on hand perspective, with our largest distributor. We did have the innovations that we filled the pipe with that would offset.

Jarrod Langhans: When we're looking at kind of just more of a days-on-hand perspective with our largest distributor, we did have the innovations that we filled the pipe with that would offset, I would say, maybe some reductions you're talking about, Mark, but on a net-net basis, media, Q4 tends to be a little, a little bit pressurized just because of the inventory on hand across our retail customers and our mass and grocery. I got it. Maybe just one follow-up, then if we think about the innovation and your comments you just made about it, the net net is kind of equaling out. It sounds like you're saying that the innovation offsets the legacy products. Is that the case when you think about the shelf? That's an incremental distribution, meaning it can't be a one to one. So you're going to add more space. So why wouldn't the pet do that?

I'd say, maybe some reductions you're talking about mark but on a net net basis. The days on hand in total for US was in good shape.

And to John's point in Q4 tends to be a little a little bit of pressurized just because of the inventory on hand across our our retail customers and our mass and grocery customers.

Got it maybe just one follow up then if we think about the innovation in your comments you just made about the.

The net net kind of equaling out.

It sounds like you're saying then the innovation offset the legacy products is that the cases, you'd think about the shelf resets and incremental distribution, meaning it's it can't be a one to one so you're going to add more space. So why wouldn't the Pepsi system take more of the products meeting taking innovation plus the legacy because you've got to backfill the legacy sales.

Mark Stiefel Astrachan: Take more of the products, meaning take the innovation plus the legacy, because you've got to backfill the legacy. Yeah, I think when we looked at our number one customer, we found that their inventory levels were fairly consistent with Q3 to Q4. So even though we did take some innovation on, so, you know, it's, I think we should look at the scan data. We had really strong scan data in the fourth quarter. And, you know, we'll see how this continues to evolve. Yeah, it's a good question, Mark.

Yes, I think when we looked at our number one customer when you look at their inventory levels are fairly consistent with Q3 to Q4, so even though we did take some innovation on so.

I think if we look at the scan data, we had really strong scan data in the fourth quarter and it's.

We'll see how this continues to evolve yes, it's a good question Margaret I think.

Jarrod Langhans: I think, you know, we can just tell you where we were as of 1231, and on a net net basis in total, our days on hand, Consistent in Good Shape. And, you know, as we got to January, we started rolling out all of the innovation that you can see all across the US and have been very successful and very good, and it has been incremental thus far. All right, well, thank you. Unknown Speaker, line by Peter Grom.

We can just tell you where we were as of 12 31 and on a net net basis in total our days on hand, where we.

Were consistent and in good shape in.

We got to January we started rolling out all of the innovation that you can see all across the U S and it's been very successful in being very good and it has been incremental thus far.

Got it alright, thank you guys.

Our next question comes from the line of Peter Grom with UBS. Please proceed with your question.

Peter K. Grom: Thanks, Operator. Good morning, everyone. So I was hoping to get some perspective on how you're thinking about the market share trajectory from the, obviously, things sort of leveled out, you know, towards the latter portion of 23. But we've actually seen some nice improvement to start the year. Maybe just to start, is the improvement we've seen year-to-date largely a function of that innovation you touched on rather than shelf resets? And then, I guess, with more resets to come, you know, how do you think investors should think about the share trajectory as we look out to March and into the spring? You know, Jarrod, you mentioned that you've now surpassed 10%.

Thanks, operator, and good morning, everyone.

Was hoping to get some perspective on how you're thinking about the market share trajectory from here.

Obviously things sort of leveled out towards the latter portion of 'twenty three but we've actually seen some nice improvement to start the year, maybe just to start is the improvement we've seen year to date, largely a function of kind of that innovation.

Sean rather than shelf reset and then I guess more reset.

How long do you think investors should think about the share trajectory as you look at March and into the spring Jarrod you mentioned that you have now surpassed 10% you are now focusing on our new targets. So just any color on what that new target might be from a share perspective.

Unknown Executive: You're now focusing on a new target. So just any color on what that new target is. Share. Yeah, no, thank you, Peter.

John Fieldly: I mean, we're not going to give any forward guidance on, you know, future share. But, you know, what we do look at are the current trajectory and where we are currently at in categories within the variety of segments and categories. We mentioned Amazon, we disclosed Amazon, we're close to a 20 share, you know, within the energy category on Amazon. And then, if you also look at, I mentioned in my script, we have 12 key markets that we're, you know, tracking ahead of a 15 share within the category, and that's Mulock data. So, you know, there is a good trajectory here.

Yeah, no. Thank you Peter I mean, we're not going to give any forward guidance on.

The future share but.

We do look at the current <unk>.

Trajectories and where we are currently at within different categories within the variety of segments and categories.

You mentioned Amazon.

Disclose Amazon, we're close to a 20 share.

Within the energy category on Amazon and then if you.

You also look at.

I mentioned in my script, we have 12 key markets that were tracking ahead of <unk> share within the category and that's moved lock data. So there is a good trajectory there I think the biggest opportunity for us when you look at it is really inconvenience.

John Fieldly: I think the biggest opportunity for us, when you look at it, is really in convenience. And you know, we've built this brand going through a variety of channels, and the last biggest opportunity is in convenience, where you got 50, 56, 57% of all sales are sold. So, you know, that's where we anticipate the biggest resets to take place in the coming resets.

We built this brand going through the variety of channels and the the last out their biggest opportunity isn't convenience, where you got 50.

50, 657%.

<unk> of all sales are sold so.

That's where we anticipate the biggest resets to take place in the coming resets right now in the convenience channel. We are just at a 10 share.

John Fieldly: Right now, in the convenience channel, we are just at a 10 share, so we're really excited about the opportunities you have there. Compared to if you just look at the food category, we're roughly around a 16 share within the energy category. So, those are some recent data points that we have, that we've shared within the script, as well as in the earnings release. Unknown Speaker We've talked before, we're somewhere between the average, as Jarrod mentioned, we're about, we closed at about a 10 share, and you know, we're on close to a 20 share within Amazon. We're working hard, the team's working hard, and we're executing. And that doesn't include the new 16-ounce essentials line, which is just getting started this year, which we're excited about. Now that's really helpful.

So we're really excited about the opportunities you have there versus if you just look at the food category, we're roughly around 16 share within the energy category. So those are some recent data points that you know that we have that we've shared within the script as well as in the earnings release.

We've talked before we're somewhere between the average as Jerry mentioned, we're about we closed at about a 10 share in Iran close to a 20 share within Amazon So.

We're working hard the team's working hard and we're executing and that doesn't include the new 16 ounce Essentials line, which is just getting started this year, which we're excited about.

No. That's really helpful. And then I guess, just one follow up just on international.

Can you maybe help us understand how we should think about the contribution from a revenue perspective are you exploring any additional markets for this year or was there anything else kind of be more of a 'twenty five narrative and then just within that.

John Fieldly: And then I guess just one follow-up, just on international, Unknown Speaker. Can you maybe help us understand how we should think about the contribution from a revenue perspective? Are you exploring any additional markets for this year, or would anything else kind of be more of a 25 narrative? And then just within that, you know, I'm sure a lot of people and you've gotten this question a lot.

I'm sure a lot of people and you've gotten this question a lot, but just maybe explain why suntory was the distributor of choice for the U K and Ireland.

Yeah. Thank you Peter I think number one when we look at international expansion. We just went into Canada, we talked about that.

Into on the script, we're really excited.

The consumer acceptance.

Wausau are excited about the B. We're in 711 Couche tard its product is doing really well and we're expanding so our partners excited Canada should be a great market.

John Fieldly: Maybe explain why Suntory was the distributor of choice for the UK and Ireland. Yeah, thank you, Peter. I think number one, when we look at international expansion, we just went into Canada. We talked about that in the script. We're really excited about consumer acceptance. We're also excited about the We're in 7-Eleven and Couchart. Its products are doing really well, and we're expanding. So our partner's excited. Canada should be a great market. UK, you know; we did announce Suntory as our partner there. They were looking for the best partners to align with on our go-to-market strategy. One thing that was very attractive about Suntory was their access to the gym community.

We did announce centuri for our partner there.

We're looking for the best partners to align with on our go to market strategy. One thing that was very attractive at centuri as their access to the gym community.

And we're really focused on and methodical approach as we expand and grow really about building awareness trial, a foundational base of loyalty and then scaling so.

As we look to see the size and the timing and sequencing of international I think that we will know that as we go through these markets and expand in these markets and how quickly. We are accepted we can move as fast as we can but we want to be very cognizant on entering new markets through our methodical approach about building that loyal foundation before we go and overall.

John Fieldly: And we're really focused on a methodical approach as we expand and grow, really about building awareness, trial, a foundational base of loyalty, and then scaling. So, you know, as we look to see the size and the timing and sequencing of international expansion, I think that's what we'll know as we go through these markets and expand in these markets and how quickly we are accepted. We can move as fast as we can, but we want to be very cognizant of entering new markets through our methodical approach to, you know, building that loyal foundation before we go. Overall, those are the comments there in regards, and we're really excited about our partner. Sounds good!

So those are the comments there and regards and we're really excited about our partnership with centuri.

Sounds good thanks, so much I'll pass it on.

Thank you.

Our next question comes from the line of Michael Lavery with Piper Sandler. Please proceed with your question.

Thank you good morning.

Good morning.

You touched on Unmeasured channels is one of your big opportunities and gave some examples corporate cafeterias University in spending.

Lots of.

Physical.

Distribution points under all of that and just would love to get a sense of how we should think about how quickly how close to that again those are how quickly those could ramp up.

Peter K. Grom: Thanks so much. I'll pass it on. Our next question comes from the line of Michael Lavery with Piper Stanley. Unknown Speaker.

Kind of what the trajectory might look like for momentum.

In those areas.

Yeah, I think everyone's really excited about how we look at our Pepsico revenues over 12% is coming from.

Michael Lavery: Thank you. Thank you. Thank you. Thank you. Good morning.

John Fieldly: You touched on unmeasured channels as one of your big opportunities and gave some examples, you know, corporate cafeterias, universities, vending machines. There's lots of... Unknown Speaker, Just would love to get a sense of how we should think about how quickly, how close to hand, those are, how quickly those could ramp up, you know, kind of what the trajectory might look like for momentum in those areas. Yeah, I think everyone's really excited about how, when you look at our PepsiCo revenues, over 12% is coming from really food service. We internally here think there's a big opportunity there. We see that Celsius is a much broader opportunity when you look at the TAM versus, say, traditional energy. We're seeing consumer consumption increase outside of that energy need state.

Really the foodservice, we internally here, we think there's a big opportunity there we've seen that Celsius is much broader opportunity. When you look at the Tam versus say traditional energy we're seeing consumers.

Consumer consumption increase outside of that energy need state, we're seeing the product being paired with sandwiches and smoothies and bowls and a variety of opportunities for fast casual. So I think it's a little bit too early for us to really know how big that opportunity is.

We have a we'll probably know over the next 12 to 24 months as we further expand and some additional quick service as well as expand an additional foodservice accounts, and then universities and hospitals as well as a as a huge opportunity for us.

Not able to quantify that at this time, but we do see it as a big opportunity.

John Fieldly: We're seeing the product being paired with sandwiches and smoothies and bowls and a variety of opportunities for fast casual. So I think it's a little bit too early for us to really know how big that opportunity is. We have a, we'll probably know over the next 12 to 24 months as we further expand, as well as expanding additional food service accounts. Then universities and hospitals as exaggerated opportunities. Not able to quantify that at this time, but we do see it as a, Okay, thanks. And just on the Canada-UK-Ireland long-term...

Okay. Thanks.

Just on the Canada U K Ireland launches.

As we think about margins for 2024.

Obviously, you would spend ahead of of really ramping those revenues.

So.

All else equal should we expect a dip in.

EBITDA margins for our EBIT margins for 2024 versus 2023.

Or.

Can you just give a sense of how to think about the spending or what's in your plans for how that looks.

Unknown Executive: Unknown Speaker As we think about margins for 2024, obviously, you'd spend ahead of really ramping those revenues, and, So, all else equal, should we expect a dip in EBITDA margins for, or EBIT margins for 2024 versus 2023, or, you know, can you just give a sense of how to think about the spending or what's in your plans for how that looks? Yeah, I'll throw that over to Jarrod for now. Yes, so they're going to be a little different. Canada, where most of the population is, I think, within 80 miles of the US border.

I'll throw that over to Jerry for additional comments.

So theyre going to be a little different Canada, where most of the population is I think within 80 miles of the U S border.

And also being so close we actually already had a co packer in Canada that we were using as a backup for our U S business, so that rollout and that growth, we think will be at a different trajectory than the UK, which.

We're kind of launching from zero.

So there will be investment in both markets as we build brand awareness and as we really build out. This system. We won't have the same scale and leverage advantages within the manufacturing as we do in the U S. So there is going to be some costs and some investment there.

Jarrod Langhans: And also, being so close, we actually already had a co-packer in Canada that we were using as backup for our US business. So that rollout, and that growth, we think will be on a different trajectory than the UK, which, you know, we kind of launched. Unknown Speaker, The Cure, Dr. David Eagleman, Dr. David Eagleman, Dr. David Eagleman It's not going to be a significant component of either our growth or our cost infrastructure this year.

But it will be.

Let's call it it's not going to be a significant component of either our growth or our cost infrastructure. This year. So we do believe that the numbers that we discussed on our prepared remarks.

John Fieldly: So we do believe that the numbers that we discussed in our prepared remarks will be able to handle those investments. And I'll just, in regards to when you're looking at Michael, one thing we've noticed is the brand awareness, even though we're not in the UK, there is an underlying brand awareness just associated with the world is really so small these days and one click away. So a lot of our influencers and social media activations are actually being picked up by potential consumers in the UK. So we have a little bit; we have more brand awareness than we actually initially anticipated based on our research. So we're excited; I think it's gonna be a great market. Okay, great. Thanks so much.

We'll be able to handle those investments as well not just in regards to when you look at it Michael One thing. We've noticed is the brand awareness, even though we're not in the U K, where there is a there is an underlying brand awareness just associated with the world is really so small these days in one click away. So a lot of our influencers and social media.

Activations are actually being picked up.

With a potential consumers in the U K. So we had a little bit we have more brand awareness and we actually than initially anticipated based on our research. So we're excited things can be a great market for us.

Okay, great. Thanks, so much thank.

Michael Lavery: Thank you. Our next question comes from the line of Gerald Pascarelli with Wedbush, so it will be their questions. Great, thanks very much. Morning, guys.

Thank you.

Our next question comes from the line of Gerald Pascarelli with Wedbush Securities. Please proceed with your question.

Great. Thanks, very much good morning, guys.

Gerald John Pascarelli: Just one on gross margin, you know, another quarter in the high 40s here, but in the energy category, you've already had a larger competitor take a rate increase, and there's sentiment that your other larger competitor will ultimately follow suit. So, you know, in the event that this happens, how do you think about managing your price gaps relative to peers? I guess I'm just curious about your thoughts around a potential rate increase this year. That would obviously imply upside to your high 40s margin target. Any color would be great.

One on gross margin another quarter in the high 40 here, but in the energy category, you've already had a larger competitor take a rate increase there's sentiment that your other larger competitor will ultimately follow suit so.

In the event. This happens how do you think about managing your price gaps relative to peers.

Just curious on your thoughts around a potential rate increase this year as that would obviously imply upside to your to your high Forty's margin target any color there would be great. Thanks.

John Fieldly: Yeah, yeah, thank you, Gerald. You know, there's opportunities. We want to be a premium priced product. I think if you look at it on a per ounce basis, we feel we're very competitively priced. There's a variety of different levers than just taking frontline pricing.

Yeah. Thank you Gerald.

Opportunities, we want to be a premium priced product I think if you look at a per ounce basis, we feel are very competitively priced.

A variety of different levers than just taking frontline pricing. So you have we have a pricing promotional strategies that we utilized as well.

John Fieldly: So you have, we have our pricing promotional strategies that we utilize as well. You know, we just launched a new line extension as well with our Celsius Essentials 16 ounce. And then you also, you know, you have your pricing architecture by channel as well. So, impact size.

We just want to launching a new line extension as well with our Celsius Essentials 16 ounce and then you also have your pricing architecture by channel as well so in pack size. So.

John Fieldly: So, you know, there are ways to navigate that. I think we're very pleased with the way we finished the year on margin. And we're really focused on driving share and revenue growth and continuing to drive consumer consumption. And ultimately, that daily, that daily consumption we're looking for. And we're just really getting started here when you look at, you know, just now a 10% share in the energy category, inconvenience. So there's a long runway ahead. But it's something we watch closely. At this point, we're not going to make any comments on the future at price. Understand? Thanks. Just one more for me.

Theres ways to navigate that I think we're very pleased with the way. We finished the year with margins and we're really focus on driving share and revenue growth and continuing to drive consumer consumption and ultimately that daily.

Daily consumption, we're looking for and we're just really getting started here. When you look at just now a 10 share in the energy category inconvenience. So there's a long runway ahead, but it's something we watch closely but at this point, we're going to make any comments on future price increases at this time.

Understood. Thanks.

Just one more for me I think your non measured channel revenue.

Came in a little better than expected specifically related to Amazon at least what we were modeling for.

Gerald John Pascarelli: I think you're not measuring channel revenue correctly. Unknown Speaker came in a little better than expected, specifically related to Amazon, at least what we were modeling for. You know, in a lower seasonal quarter, your 4Q absolute revenue is almost in line with your second quarter, which obviously benefited from Prime Day. So any additional color on the drivers in the quarter within that channel would be helpful, if you could provide any. Thank you. Yeah, Amazon, we had a great quarter. It was a great period. And, you know, there is a lot of timing as well within shipments and how, you know, Amazon kind of controls or feeds inventory through their warehouses based on their algorithms. So, you know, we're going to keep shipping them. We're the number one energy drink right now, roughly about a 20% share in the energy category. I don't really have much color other than that.

But at a lower seasonal quarter for Q absolute revenue was almost in line with what your second quarter, which obviously benefited from Prime day. So.

Any incremental color on the drivers in the quarter within that channel would be helpful. If you could provide any thank you.

Yes, I mean, Amazon, we had a great in the quarter was a great period and there.

There is a lot of timing as well within shipments and how.

The Amazon kind of controls or feeds inventory through their warehouses based on their algorithms. So.

We're going to keep shipping them, we're going to we're number one energy drink right now roughly about a 20 share in the energy category.

I don't really have much color than that but we continue to drive further revenues through that channel. It is a omnichannel world and that's something we really focus here on Celsius at Celsius, we want to deliver Celsius to consumers when they want it how they want it and I think it does show too that there is still opportunity for continued growth within the Amazon channel. So it's not it's not necessarily.

John Fieldly: But we continue to drive further revenues through that channel. It is an omnichannel world. And that's something we really focus here on Celsius. We want to deliver Celsius to consumers when they want it, how they want it. And I think it does show, too, that there's still opportunity on that channel.

Slowing down suddenly just because we got to a certain.

Spot within that so I do see that as a continued growth opportunity for us as we look out into 2024.

Got it thanks very much guys.

Thank you.

Our next question comes from the line of Sean Mcgowan with Roth Capital Partners. Please proceed with your question.

Gerald John Pascarelli: So, it's not necessarily slowing down suddenly just because we got Bye. So I do see that as a continued growth opportunity for us as we look out into the future.

Thank you very much.

A couple of quick ones here on the sales and marketing give some good color on what to expect in the first quarter and I think that's right.

Sean Patrick McGowan: Thanks very much, guys. Our next question comes from the line of Sean McGowan with Roth Capital Partners. Unknown Speaker, Thank you very much.

23%, so a little higher than you had talked about.

Some periods in the past.

Is that a good number to use for the full year of 24.

I think our you referred to Q1 and Q4 in my prepared remarks, and if you look at our Q1 Activations in activity. We've got the Super Bowl Activations. We did that we believe were very successful we've actually got a J Paul fight this weekend down in Puerto Rico.

Jarrod Langhans: A couple of quickies here on sales and marketing give some good color on what to expect in the first quarter. And I think that rate, 23%, is a little higher than you had talked about for some periods in the past. Is that a good number to use for the full year of 24?

Sean Patrick McGowan: I think I referred to Q1 and Q4 in my prepared remarks. And if you look at our Q1 activations and activity, we have the Super Bowl activations we did that we believe were very successful. We've actually got a Jake Paul fight this weekend down in Puerto Rico with another number of influencers that we support. We kicked off the MLS last week. Unknown Speaker, Unknown Attendee, Unknown Attendee, Unknown Attendee, Three, I think those are the kind of data points to stick to.

With another number of Influencers that we support.

We kicked off the MLS last week or a couple of weeks ago.

We kicked off the F. One partnerships. So we've got a number of things that are really rolling in Q1 to keep the momentum going as we look at a full year basis.

Historically, we've been in the 22% to 24% range, we were at 20% on a year to date basis in 2023.

I think those are kind of the data points to stick stick to if we've got opportunity to invest ahead of growth, we're going to continue to invest it we're going to spend our money wisely, John and I require an ROI on everything we do so we're not going to spend foolishly, but.

Jarrod Langhans: If we've got an opportunity to invest ahead of growth, we're going to continue to invest in it. We're going to spend our money wisely. Jon and I require an ROI on everything we do, so we're not going to spend foolishly.

Jarrod Langhans: But if we see an opportunity to push growth, we'll push growth. If we don't see it, we'll continue to leverage it. Okay, thank you. And then on the essentials line, could you give us, I mean, that's a pretty rapid acceleration of ACV. Where do you think that goes?

But if we see opportunity to push growth will push growth. If we don't see it will continue to lever.

Okay. Thank you and then on the <unk>.

Essentials line could you give us I mean, thats pretty rapid acceleration of ACB, where do you think that goes in basically more generally what is the plan for additional skus and additional outlets for that why I'm seeing it in its own cooler or separate cooler and some stores do you think this can double that.

Sean Patrick McGowan: And basically, more generally, what is the plan for, you know, additional SKUs and additional outlets for that line? You know, I'm seeing it in its own cooler or separate cooler in some stores. Do you think this can, you know, double that? Can you get to an 80% plus ACV by the end of the year?

Can you get to 80% plus HCV by the end of the year.

John Fieldly: You know, that's a well, we don't haven't launched a new line with our new distribution partner, PepsiCo. So, you know, I think we have a lot to learn, we are working hard, and we think it can definitely be incremental. You know, there is a lot of opportunity there that 16 ounce Celsius essentials has been really well received by consumers when, what's great, it's not cannibalizing existing sales. So we are bringing in additional new consumers and converting new consumers into the Celsius portfolio. So that has us really excited. But it's not it; we're not trading our existing consumers. So the initial data, it's still early, when you look at it, you're only talking about eight, you know, eight weeks, 12 weeks of data we have at best in certain stores.

Yeah.

Well, we don't we've never launched a new line with our new distribution partner Pepsico So.

I think we have a lot to learn we are working hard we think it can definitely be incremental.

There is a.

A lot of opportunity in there that 16 ounce Celsius essentials has been really well receptive by consumers what's great. It's not cannibalizing existing sales. So we are bringing in additional new consumers and converting new consumers into the Celsius.

Portfolio. So that has us really excited it's not we're not trading our existing consumers. So.

The initial data it's still early and you look at it Youre only talking like eight eight weeks 12 weeks of data we have at best and certain stores. So we really need to get a little bit more here.

Sean Patrick McGowan: So we really need to get a little bit more data under our belts as we, you know, move into, get through Q1, and most importantly, see what these resets bring that are coming up. So I think this summer, we'll have a better read on how this portfolio is going to perform the Celsius Central line within our overall global portfolio. Yeah, it's a great product. You should get out and taste it if you haven't already.

Data underneath our belt as we move into Q.

Get through Q1, and most importantly, see what these resets bring that are coming up. So I think this summer we'll have a better read on how this portfolio is going to perform.

<unk> Central line within our overall global portfolio, that's great product, you should get out and tasted if you haven't yet taste great.

Eric Adam Serotta: I have some in my office. Thank you. Our next question comes from the line of Eric Serotta with Morgan Stanley. Thank you for your questions. Great. Thanks so much, guys. So could you give a little bit more granularity as to what drove the step up in Pepsi revenue through the food service channel? I think it had been running at 10%.

I had some goodbye office. Thank you.

Yeah.

Yes.

Our next question comes from the line of Eric <unk> with Morgan Stanley. Please proceed with your question.

Great. Thanks, so much guys.

So can.

Could you give a little bit more granularity as to what drove the step up in Hep C revenue through the foodservice channel.

It had been running at 10% now it's at 12, 5%.

Jarrod Langhans: Now it's at 12.5%. I think Jersey Mike's and Dunkin' are still in the very early days, and I'm not sure if those go through Pepsi. So maybe you could clarify that. But what specific channels are you seeing?

Think Jersey, Mike's and Duncan are still very early days and I'm not sure. If those go through perhaps so maybe you could clarify that but what specific channels that you are seeing traction in.

John Fieldly: traction in food service through Pepsi. And then a broader question in terms of the new SKUs that you're adding, particularly the vibes and the core flavors, what are you seeing in terms of incrementality there? How are the, you know, sort of legacy flavors and vibe, legacy core, and vibe flavors performing as you're introducing these new SKUs? And then, you know, sort of what do you see as the limit for SKU count or flavor variety here? You're still a long way from Monster and Red Bull. I'll start with the food service one. Jon can have all the other ones.

Foodservice through Pepsi and then.

<unk> question in terms of the new Skus that you're adding particularly on the vibes in the core flavors.

What are you seeing in terms of incrementally there how are the scribble legacy flavors and buy.

Legacy core and Bob's flavors performing as you're introducing these new Skus and then sort of what do you see as the.

As the limit for.

For SKU count or flavor variety here, you're still a long way from monster and Red Bull.

I'll start with the foodservice one Jonathan.

Jarrod Langhans: So food service, I look at that as just continued momentum. I mean, if you look at our club program, once we start launching with them, we get good progress, good momentum, but then you really see the volumes and velocities growing. We're seeing the same thing across food service. We also had the college program fully in place in Q4.

All the other ones.

So foodservice I look at that as just continued momentum I mean, if you look at our club program. Once we start launching with them. We've got good good progress good momentum, but then you really see the volumes and velocity is growing we're seeing the same thing across foodservice. We also had the college program fully in place in Q4, so as we talked about last quarter over the <unk>.

Jarrod Langhans: So, as we talked about last quarter, during the summer season, it tends to die down a bit when college students are out. We're also seeing great progress in the other channels within food service that we're in. You mentioned Mike Fitzgerald, Pew Crossing, Michael MVP, Elon Musk, Frank Fosse episode. Mike Fitzgerald, Pew Crossing, Michael MVP, Elon Musk, Frank Fosse episode, Unknown Speaker. I really appreciate that, so, you know, continued momentum, and we're doing great there. But let me throw the other ones over to Jon. Jon Andersen

Summer season, it tends to die down a bit when the college campuses empty out. We're also seeing great progress in the other channels within foodservice that we're in you mentioned, Mike you mentioned Dunkin' There's also <unk>.

Hospitals, there's a variety of other food establishment and so we're just continuing to see ongoing momentum across that channel and we're really seeing that grow and be built out in <unk>.

Distributor has really been helping significantly with that so.

Continued momentum and we're doing great there, but let me throw the other ones over to John.

John Fieldly: Yeah, and just a further detail on that. I think we're also seeing great momentum, and you talk about the step up, and Jer, you mentioned college universities as a big opportunity and are seeing growth there, but also vending. Keep in mind, vending is also going through that food service and the vending, we've expanded in vending, and we're seeing great results in vending and at-work micro-markets. We talked about those prior, on several calls prior, and the at-work micro-market opportunity is really good. I mean, you see a lot of opportunities at work locations.

Further detail on that I think we're also seeing great momentum and you talk about the step up in Jared you mentioned.

Can be a college universities as a big opportunity and seeing growth there but.

Also bending keep in mind vending is also going through that foodservice.

The vending.

We've expanded in vending, we're seeing great results in vending and at work micro markets, we talked about those prior in several calls prior at the at work micro market opportunity is really good I mean, you see a lot of opportunities at work locations. So youre seeing the product continuing to scale and I agree.

John Fieldly: So you're seeing the product continue to scale. And I agree with you, Eric. I think seeing that go from 10% to 12% just shows you the growth opportunity we have on our overall and this non-track channel. Looking at new SKUs, the Vive line, we're excited about the Vive line. Talk about: Unknown Speaker, Unknown Attendee, Unknown Speaker, Unknown Attendee, Unknown Attendee.

With you Eric I think seeing that go from 10% to 12%.

Just shows you that the growth opportunity, we have on our overall basis.

And these non tracked channel opportunity looking at new Skus out of Vibe Bottomline. We're excited about the <unk> line to talk about the success. We had I mentioned on the comments on the call earlier that cosmic Vive, we launched it circle, K and really going into galactic with Athene.

Space the space Odyssey.

John Fieldly: Odyssey with our two new Vibe flavors that have a space theme. We're really excited about that. We're going to have some events coming up at Coachella, a variety of neat things too that you guys will be able to. Unknown Speaker The pipeline is going to be a totally separate line. We're going to scale and grow that. I think there's a lot of opportunity for us to bring out innovative flavors and experiences with every sip. Then our core flavors – the team continues to bring out great flavors; you look at core even expanding the core into our no-fibs line as well, where there's blue raspberry lemonade that we launched at 7-Eleven in Q1 has been phenomenal. I mean, the product tastes great and really expands this non-fizz or non-carb opportunity that could be a wholly another revenue stream and ultimately an extension of our portfolio as well.

With our two new <unk> flavors that have a space team are really excited on rolling that out we're going to have some events coming up of Coachella and a variety of neat things too that you guys would be able to see the bottom line is going to be a totally separate line, we're going to scale and grow that I think theres a lot of opportunities.

Bring out innovative flavors and experience is with every Sip and then our core flavors are the team continues to come out with great flavors. I mean, you look at core or even expanding the core into our no <unk> line as well, where there's blue raspberry lemonade that we launched at 711 in.

In Q1 has been phenomenal I mean, the product tastes, great and really ex brands this nonferrous or non carb opportunity that could be an wholly another revenue stream and ultimately a at an extension of our portfolio as well so.

John Fieldly: So we're monitoring the SKUs; obviously, you need to do SKU rationalization, so that's something we talk internally at innovation meetings. We'll be doing that each year. We'll cut our, as they call it, our tail, our slow-moving SKUs, but we do see consumers looking for new innovation and staying within our portfolio, which is great. So our new sparkling peach, raspberry peach, is phenomenal, and has a great flavor. You know, Eric, if you haven't tried it, please go out and try it. I think you'll enjoy it as much.

We're monitoring the Skus, obviously, you need to do SKU rationalization. So that's something we talk internally at innovation meetings will be doing that each year.

We went out we will cut or as I call. It our tail are slow moving skus, but we do see consumers looking for new innovation and staying within our portfolio, which is great. So our new sparkling peach.

Teach raspberry peaches phenomenal great flavor.

Eric If you haven't tried it please go out and try it I think you'll enjoy it as much as we do.

Eric Adam Serotta: Great, thanks so much. Our next question comes from the line of Jim Salera with Steven, with your questions. Good morning, thanks for taking our question. I wanted to drill down a little bit on the coolers because I live in Cleveland, Ohio, and I was very surprised to see a Celsius-branded cooler very prominently displayed at the cash wrap of a local grocer here. And so can you just talk about kind of the channel strategy there? How you want to get those coolers placed?

Great. Thanks, so much thank you.

Our next question comes from the line of Jim Suva with Stephens. Please proceed with your question.

Hi, guys. Good morning, Thanks for taking our question.

Wanted to drill down a little bit on the coolers, because I live in Cleveland, Ohio, and I was very surprised to see.

A celsius branded cooler very prominently displayed at the cash wrap of our local grocery here and so can you just talk about kind of the channel strategy. There how you want to get those coolers plates and then maybe as a part two to that question just any color you can offer on incremental uplift velocity repeat.

James Ronald Salera: And then maybe, as a part two to that question, just any color you can offer on incremental uplifts, velocity, repeat rates, trial buys in locations that do have the branded fridge. Yeah, Jim, it's a big, big initiative we've had over the years trying to get more cold placements. If you've been tracking the company over the years, you know, we were historically sold warm. So we had to build a loyal consumer that would actually have to take the product home and chill it, and then drink it as part of their daily lifestyle and routine. And that really shows you the loyalty of the Celsius consumer. Cold availability is key to success in order to compete in the energy category, especially with impulse. That is the biggest opportunity for us.

Right.

Trial buys in locations that do have the branded fridges.

Yeah, Jim It's a big Big initiative, we've had over the years trying to get more coal placement.

If you've been tracking the company over the years.

We've been historically sold warm.

So we had to build a loyal consumer that would actually have to take the product home in Chile, and then drink or a daily lifestyle and routine and that really shows you the loyalty around the Celsius consumer.

Cold availability is key to the success in order to compete in the energy category, especially with the impulse purchases that is the biggest opportunity for us and kind of mentioning your prior and a question we look at the convenience channel.

Impulse purchase is key to the success of where we want to go and who we want to be.

In the category so.

We haven't replaced about 10000 coolers, we are investing in more coolers were working on placing more coolers, we want to be right at checkout I level is critical.

James Ronald Salera: And kind of mentioning it prior in a question, we look at the convenience channel, you know, that impulse purchase. That's a big opportunity. We do see uplift. If you're by the register and you're cold, kind of the saying we say internally here, "If it's cold, it's sold." So the other thing is to stack it high and watch it fly. Some comments we make around displays: definitely a lift. The exact lift is hard to say because each channel and each store in each region is quite different in velocity levels.

We're talking to a variety of retailers as well to gain additional checkout coolers I think that's a big opportunity.

Most recently down in South, Florida, If you look at Publix, we've gained checkout coolers and we're looking to gain additional checkout coolers on the next resets so that's a big opportunity.

Unity, we do see uplift if you're by the register in your Cold.

Kind of saying, we say internally here, if it's cold it's sold so.

And stack it high and watch it fly.

Some comments, we make around displays but definitely have left the exact lift is hard to say.

<unk> each channel in each store in each region is quite different on the velocity levels, but there is a substantial lift.

John Fieldly: But there is a, Okay, great. And maybe one follow-up. Unknown Speaker: Are all of the actual uses in the cooler consistent across the portfolio? Or do you guys make changes to that based on channel, you know, local geography? Like, like, could we see essentials lines in there?

Okay, Great and maybe one follow up on that.

All of the actual use in the cooler consistent across the portfolio or do you guys make changes on that based on channel local geography.

Could we see a central's lines in there or some of the other product innovation show up in the coolers.

John Fieldly: Or some of the other product innovation show up in the coolers? Yeah, that's a great question. So we do have planograms and progressions we work on based on the size of the cooler. There is a little bit of regional seasonality that, based on the retailer, we do exclusive flavors. So like at Circle K, we did our Cosmic Vibe.

Yeah that's.

That's a great question. So we do have a plan of grams and progressions, we work on based on the size of the cooler.

There is a little bit of regional seasonality that based on the retailer with your exclusive flavors. So I could circle K we did.

We did our cosmic by I'd talked about 711, and the new launch with the Raspberry Lemonade. So it's free so you will see potentially unique flavors and giving coolers, but we do have a standard national plan O Gram that's being followed.

John Fieldly: I talked about 7-Eleven, the new launch with the raspberry lemonade, so it's free. So you will see potentially unique flavors in given coolers, but we do have a standard national planogram that's being followed. Probably not always followed to the T, but that is something we work on as an overall organization and work with our PepsiCo partners. In the coolers according to our plan a gram, so the core should have its own plan a gram, the Vive should have a plan a gram, and also our F parole line should have a plan a gram as well as our Celsius essential, Unknown Speaker. , That's kind of our go-to market strategy. Great, that's very helpful.

Not always volatility, but that is something we work on as an overall organization and work with their Pepsico partners to keep the progressions in the coolers in accordance to our plan of grams. So the core should be have its own plan O Gram. The bias should have a plan to Graeme and also our fifth free line should have a plan of Graham as well as our Celsius Essentials 16 ounce.

That's a that's kind of our go to market strategy.

Great. That's very helpful. I appreciate the color guys. Thanks. Thank you.

James Ronald Salera: Appreciate the call, guys. Thanks. Thank you. Thank you, Jim. Well, that's all the time we have for questions.

Jim.

That's all the time, we have for questions I'd like to hand, it back to you John Bailey for family for closing remarks.

Unknown Executive: I'd like to hand it back to you, Jon Fieldly, for... Closing. Thank you, Doug. And thank you, everyone, for joining us today on our Celsius Holdings fourth quarter 2023 earnings call. I'd like to thank and close by thanking all of our employees. Your dedication to Celsius has helped to create a company where they can pursue their own live-fit lifestyles with a cold cell. Celsius will be participating in several upcoming conferences, details of which will be published on our investor relations corporate website. I look forward to seeing many of you there. Thank you for your interest in Celsius. Stay healthy and live. Ready? This does conclude today's program. Thank you. You may disconnect your lines at this time and have a wonderful day. BF-WATCH TV 2021

Thank you Doug and thank you everyone for joining us today on our Celsius Holdings fourth quarter 2023 earnings call I'd like to thank and close by thanking all of our employees. Your dedication to Celsius has helped to create the success. We're enjoying today and together we will continue to provide essential energy to more consumers. So they.

Can pursue their own lives fit lifestyles with a cold Celsius in their hands.

Celsius will be participating in several upcoming conferences details of which will be published on our investor Relations corporate website, we look forward to seeing many of you there.

For your interest in Celsius stay healthy and live fit.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.

Okay.

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